Thousands of Yorkshire investors breathed a sigh of relief on the news that Sirius Minerals, the company behind the £3.2bn polyhalite fertiliser mine near Whitby, is looking for a strategic investor to back a new development plan.
Shares in the firm were up 6 per cent on the news, having surged nearly 40 per cent earlier in the day following the revised development plan.
Analysts suggested that the new plan, put forward by Sirius chief executive Chris Fraser, could be good news for shareholders, some of whom had expected the value of their shares to be seriously damaged.
Analyst Richard Knights at Liberum said: "Today’s release implies scope for less dilution than expected, if it can be executed.
"There are still many unknowns, but a path to an accretive outcome has been laid out."
Analysts at Shore Capital said in a note: "A key aim of the strategic review has been the protection and maximisation of shareholder value. The plan appears to achieve this."
Shareholders had feared their stake in the polyhalite project could be heavily diluted after Sirius failed to reach a bond sale target which would have unlocked a loan of up to £1.95bn in September.
It put the brakes on the Yorkshire mine after the announcement, which came as a shock to many Yorkshire retail investors - typically private individuals, rather than professional investors - who had put their money into the company.
At the time of the September announcement, Russ Mould, investment director at AJ Bell, said: “This is terrible news for a very large number of retail investors who had put their faith in the company. Many of these shareholders live close to the mine and invested as a show of support in a project that had the potential to greatly improve the local economy."
Mr Fraser revealed that the company is now talking to potential partners and investors in a bid to raise £470m by April. This would help Sirius push ahead with a scaled-back drive to mine polyhalite in North Yorkshire.
The mineral, which can be used as fertiliser, would be transported to Teesside via a conveyor belt in a 23-mile (37km) long tunnel. There, it would be processed and Sirius would ship its polyhalite-based fertiliser, Poly4, to customers.
Sirius now hopes that, if the company can get to the mineral deposits, which are buried a mile underground, it will remove the risk that had discouraged investors.
Mr Fraser said: "The value of Sirius is unlocked by reaching production and delivering Poly4 to our customers around the world.
"This approach allows us to achieve that with less upfront capital while retaining the significant return opportunity it presents for our shareholders and stakeholders."
The company can then go back to raise a further £1.95bn to expand production to 10 million tonnes per year.